The US is now home to the 2 biggest risks to the global financial system

HSBC's Canary Wharf office, its global headquarters.REUTERS/Russell Boyce/File Photo
HSBC is no longer one of the two most important banks in the global financial system, and has been replaced by American lender Citi, according to the latest data from the Financial Stability Board.

The FSB was set up by G20 after the financial crisis — which saw the downfall of Lehman Brothers, and the near collapse of many other institutions — as a global watchdog for the financial sector.

One of its responsibilities is to identify banks that are "too big to fail," which are lenders that are so important to the financial system that their failure would cause widespread economic damage.

The banks are split into buckets, with each corresponding to higher loss absorbency requirements based on how important to the global financial system the bank is. The higher the number, the more important the bank and the more capital it will be required to hold.

At its last update, HSBC and JP Morgan sat at the top of the table in bucket four out of five. However, this year, HSBC has dropped into bucket three, while Citi has jumped. JP Morgan's position is unchanged. Other fallers include Barclays, which has dropped from bucket three last year, to bucket two this year.

Bank of America moved up a bucket, from bucket two to bucket three, while Wells Fargo moved up a bucket, from bucket one to bucket two.

The changes reflect a shift in the global banking business. In 2015, four of the six most systemically important banks were European banks (HSBC, Deutsche Bank, BNP Paribas, Barclays). Now, there is an even split between the US and Europe, with each continent having three banks each in the top six.